Why does the file appear to be 1.2 TB? This is because space is "allocated" for all possible user IDs, which is
about 2^32 users time 256 bytes for each user which is about 1.2 TB -- more or less.
This is, thankfully, an illusion. The fail is created as a sparse file, so
only the chunks of the file that are used are allocated. So the space really isn't allocated.
This just shows you how big the would would be if you tried to copy it or if you 2^32 users.